Spain to Increase Retirement Age and Freeze Pensions?

Spain is likely to raise the retirement age to 67 (from 65) and freeze
pensions in order to save about 4 billion euros per year;

Spain's unemployment will soon exceed 25%, and will stay at that level
until at least 2015;

Spain does not want austerity terms dictated from outside Spain;

Spain will announce its own reform (read 'austerity') measures on September
28, following Cabinet approval of its 2013 budget;

in August Spain took 4.4 billion euros from an insurance fund in order
to fund payments to 8.1 million Spanish pensioners. This where Spain's
population is about 47 million; and,

the Spanish Government is not ruling out using an emergency 'Pension Guarantee'
fund by the end of 2012 in order to then pay pensioners.

Increasing the retirement age by two years and freezing pensions in order
to possibly save 4 billion euros a year is a statement that is based on a calculation
using assumed inflation rates. Stated differently, I assume the so-called savings
really are savings measured against what would be the forward pension costs
but for removing inflationary increases to pension costs from the equation.

Under any circumstances, these strike me as 'band-Aid moves' at best. Moreover,
if I am right in what freezing means, there is no austerity in that in the
context of reducing current costs.

Watch carefully for announcements from and about Spain this week and next,
where for me what happens with Spain seems critical to what is likely to happen
in the Eurozone generally.

Through his www.BusinessTransitionSimplified.com website
and his Business Transition & Valuation Review newsletter Ian R. Campbell
shares his perspectives on business transition, business valuation and world
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